Market Mantra: 03/10/2017 (09:00)
SGX-NF: 9895 (+100)
For the Day:
Key support for NF: 9860-9810
Key resistance for NF: 9925-9975
Key support for BNF: 23900-23700
Key resistance for BNF: 24100-24300
Hints for positional trading:
Technicals
indicate that, NF has to sustain over 9925 area for further rally towards
9945/9975-10015 & 10050-10115 area in the short term (under bullish case
scenario).
On the flip side, sustaining below 9905 area, NF may fall towards
9860-9810 & 9760-9705/9695 area in the short term (under bear case
scenario).
Similarly, BNF has to sustain over 24100 area for further rally
towards 24300-24550 & 24750-24850 area in the near term (under bullish case
scenario).
On the flip side, sustaining below 24050 area, BNF may fall
towards 23900-23800 & 23700-23600 area in the near term (under bear case
scenario).
As par early SGX indication, Nifty Fut (Oct) set to open around
9895, almost 100 points gap-up catching the extended weekend levels of global
market amid positive global cues after USD goes higher for EU political jitters
(Catalonia referendum) coupled with upbeat US ISM Mfg PMI data, hopes for a
hawkish new Fed chair after Yellen and US tax reform optimism. A higher USD is
good for export heavy Asian & EU economy & the market.
Overnight US market rallied to close at another record level overcoming the hilarious
‘act of pure devil” of US mass shootings incident at Las Vegas yesterday on
upbeat economic data, optimism over US tax reform & Q3 corporate earnings.
Overall, it’s like a goldilocks like situation in US economy
with decent real wage growth, improved GDP, lower inflation & and steady
consumer spending and upbeat corporate earnings with an environment of low
interest rates. Market may be also assuming that US corporate earnings will be
further boosted once US tax reform/cut proposal get implemented with
retroactive effect from Jan’17 and it seems that the old “Trump/reflation trade”
is back in US again.
DJ-30 rallied by around 0.70%, while S&P-500 closed at
around 2529, up by almost 0.40% and NQ-100 gained by around 0.3%; US market was
yesterday helped by techs, media, health care, banks & financials and also
by gun maker’s shares after the horrific US shooting incident yesterday. US market
was dragged by hotel & resorts related scrips yesterday.
Although, market may be optimistic about Trump’s tax reform
proposal, the legislative passage of the same may be doubtful under the present
format. US stock future (SPX-500) is
now trading around 2528, almost unchanged after Trump refused his foreign sec’s
(Tillerson) effort for a direct negotiations with Kim, terming it a “an waste
of time” as Trump is not interested to follow the failed lines of his three predecessors.
]
As par latest SK report, NK may be preparing for another ICBM
test between 8th -18th Oct, coinciding with its party
anniversary and China’s party congress. Looking ahead, SPX-500 now need to
break over 2335 zone for further rally; otherwise it may fall and sustaining
below 2514 area, time & price correction may be more in the coming days.
Back to home, after opening upbeat around 9895, tracking
positive global cues, Indian market (Nifty Fut) is now consolidating around
9860; up by almost 0.60% ahead of RBI tomorrow, which is expected to be on a “hawkish
hold”, considering overall Indian macroeconomic scenario and stance of global
central banks (Fed/ECB), on their path of QT/monetary policy normalization.
RBI may also consider rate cut transmission issues by the banks
and poor credit growth on account of lack of quality & eligible borrowers
and thus may focus more on NPA management rather than an abrupt rate cut.
On the other side, market may rally moderately if RBI takes a
dovish script tomorrow, considering the poor economic activity & slump in
GDP after DeMo & GST fiasco. Although, it may be very unusual for RBI
credibility, but one can’t ignore the possibility of a “Dewali Gift” to the
nation tomorrow, if Patel/MPC cut the rate by 0.25-0.50% to stimulate the
slowing economy from its deepest slump in the last three years.
No doubt, market may also like to hear from the RBI Gov itself
about trajectory of Indian economy amid debate of fiscal stimulus vs fiscal
discipline; so far RBI was silent in this “national debate”, despite it may be
the primary function of a central bank to ensure an appropriate monetary policy
aiming at maximum employment & growth with decent price stability (inflation).
Meanwhile, India’s Markit Mfg PMI for Sep flashed subdued at
51.2 vs estimate of 51.9; prior: 51.2; new orders sub-index at 51.0 vs 51.5
prior in Aug. Although, the Sep PMI data is unchanged wrt to Aug and it’s still
above the boom/bust line of 50, the overall data may continue to point towards
weak output & subdued new business orders/growth continuing after the
recent implementation disruptions of GST.
So far market is unfazed, may be because such weak PMI data may
be already discounted after terrible Q1FY18 GDP growth at 5.7%, lowest since
2014. Moreover, a slowing economy may be positive for the stimulus addicted
market, as it may put more pressure on RBI to cut rates. The real question is
now that will RBI oblige this time again? Most probably, it will not as
ultimately RBI has to keep the Indian bond yields attractive enough to fund the
Govt deficit, despite all the narratives.
SGX-NF
SPX-500
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